BLBG: Gold Rises as Scrap Sales Slow, Investors Add to Their Holdings
Gold rose for a second day in London as scrap sales slowed and investors added to their holdings.
Owners of gold sold a record 558 metric tons (17.9 million ounces) of metal into the market in the first quarter, when gold rose to an 11-month high, according to a World Gold Council report today. Investment in the SPDR Gold Trust, holder of 1,106 tons of gold, was unchanged yesterday as assets climbed in Gold Bullion Securities Ltd. for the first time in a week, according to information on their Web sites.
“We don’t see a lot of scrap coming out because people already sold into the market on the first rally,” said Bernard Sin, head of currency and metals trading at Swiss refiner MKS Finance SA in Geneva. “We are inching up bit by bit” as investors keep their holdings rather than sell out, he said.
Gold for immediate delivery rose $3.55, or 0.4 percent, to $928.60 an ounce at 11:31 a.m. in London. The price climbed to $1,006.29 on Feb. 20. June gold futures jumped 0.2 percent to $928.80 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.
Investment purchases more than tripled in the first quarter to 595.9 tons, while jewelry demand fell 24 percent to 339.4 tons, the London-based World Gold Council said today in a report based on figures from research company GFMS Ltd.
“Investment flows in the first quarter of this year were unprecedented and, based on an analysis of the past 30 years of the gold market, probably unsustainable in the long term,” UBS AG analyst John Reade wrote in an e-mail. “Investors are turning to gold because of fears of long-term inflation and major currency debasement due to fiscal deficits, government debt issuance and quantitative easing. All of these concerns are likely to continue for the next year or so.”
Nearing Record
Gold Bullion Securities on the London Stock Exchange had gold assets of 4.273 million ounces yesterday, up from 4.268 million on May 18, according to the Web site of management company ETF Securities Ltd. It was the first increase since May 13. Investors are “moving from safe-haven to the inflation trade,” said Hector McNeil, head of sales at ETF Securities in London.
Spot gold has “the potential to set a new all-time high in the next few months,” according to Andrew Chaveriat, a New York-based strategist at BNP Paribas who uses charts and graphs for forecasts. The metal reached a record of $1,032.70 in March 2008.
Silver increased 0.1 percent to $14.195 an ounce and platinum climbed 0.3 percent to $1,146.50 an ounce. Palladium gained 0.1 percent to $234.25 an ounce.
